GSC Group Defaults On Bank Loan

GSC Group, a Florham Park, N.J.-based investment shop overseeing more than $18 billion in assets, has defaulted on its bank loan, according to Moodys Investors Service.

GSC missed a scheduled payment on its term loan, resulting in the downgrade of its credit facility to 'Ca' from 'Caa1'. Moody's also placed the rating on review for possible further downgrade.

GSC is presently considered to be highly dependent on realizing gains from assets sales in the distressed debt and equity funds segment of the business, said Matthew Noll, a Moody's vice president and senior credit officer. Our rating review will evaluate GSC's efforts to reduce the uncertainties with debt obligations and devise a viable going-forward plan as an investment manager.

Moodys commented that GSC has been under significant rating pressure since December 2007, when severe disruptions in structured credit markets arose. Since that time, GSC's managed investment vehicles  CDOs CLOs, mezzanine funds, distressed debt and equity funds  have been greatly impacted.

We are in negotiations with the banks as we speak, talking about restructuring the loan, Carl Crosetto, a GSC managing director in investor services told Bloomberg. Many people are experiencing tough times. We have a situation we have never seen before in the credit markets, certainly not in most peoples lifetime.

GSC manages nine U.S. CLOs, and five in Europe.

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